Bonds are debt instruments issued by governments, corporations, or other institutions to raise funds from investors. When you buy a bond, you are essentially lending money to the bond issuer, and in return, the issuer promises to repay the principal at maturity and pay interest periodically over a period of time.

There are several important points regarding bonds:

1. **Principal**: The amount of money lent by the investor to the bond issuer, which must be repaid when the bond matures.